Corporate America Cashing In on Porn

March 25

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Porn's profits have proven irresistible to some of America's biggest corporations. "The revenues are large enough that many of these, if not most of these companies, are willing to put up with a certain level of criticism in order to maintain the cash flow," said Fred Lane, author of Obscene Profits: The Entrepreneurs of Pornography in the Cyber Age.

Long-distance telephone service giants AT&T and MCI Worldcom have been leaders in the 1-900 market, which is dominated by phone-sex services and psychics. Although phone sex continues to generate almost $1 billion a year, its popularity is declining because of competition from the Internet.

Although AT&T is discontinuing its 1-900 service by the end of this year, the company is still making money from pornography on its cable services, which carry several adult pay-per-view channels, including Playboy's Hot Network. AT&T's proposed merger with Comcast Cable will reach 22 million subscribers in the United States, making the merged company the largest distributor of pornography in the country.

AT&T said in a statement that only a small segment of its customer base buys adult films.

A former AT&T cable executive, Jon Radloff, said the adult pay-per-view market was "very profitable" for AT&T, but not something the company wanted to draw attention to. "We wanted to provide it, but it wasn't something that we touted in our advertising campaigns," said Radloff, who was recently laid off in a merger-related downsizing. "We knew that if you offered it, the folks that were interested in that sort of entertainment would find it."

Another blue-chip company that profits from porn is General Motors, whose 225-channel DirecTV satellite service includes the Hot Channel, one of the channels Playboy bought from Vivid, and other adult channels. The adult offerings reportedly generate $150 million in revenue for DirecTV. "It certainly is a powerful contributor to profits for DirecTV," said analyst McAlpine.